Consumer Payment Card News


Punitive credit card interest rates will likely exacerbate the recession like none before. In reviewing the last five recessions has found that the current recession offers the lowest prime rate, but the highest credit card APRs ever. During the current recession that started in December 2007, the prime rate has been trimmed to 4.00% while punitive credit card interest rates charged by the top issuers is now 27.99% (prime +23.99%). In the last recession (March 2001 to November 2001), the prime rate was cut to 5.00% and credit card interest rates topped out at 23.99% (prime +18.99%). Thus, the “spread” between the prime rate and the highest credit card APRs, charged by the largest issuers, is now 24% compared to 19% in the prior recession. During the recession in the early 1990s, the spread was 10% and during the recession in the early 1980s the spread was about 9%. It is unlikely that credit card issuers will increase punitive rates further, but look for more cardholders to be bumped up to the highest rates as they fall behind on payments or screw up. Punitive interest rates are triggered by making late payments, exceeding the credit limit, submitting a dishonored payment or otherwise defaulting on the credit card terms and conditions (T&C). Most of the largest issuers indicate they have discontinued the “universal default” practice wherein a cardholder is triggered into higher rates if they default on any credit agreement or if their credit score deteriorates. Best advice is to thoroughly examine all credit card statements and communications from your provider for changes and to vigorously protest the changes.

Jan 1980-Jul 1980: 11.00% 19.80%
Jul 1981-Nov 1982: 11.50% 19.80%
Jul 1990-Mar 1991: 9.00% 18.90%
Mar 2001-Nov 2001: 5.00% 23.99%
Dec 2007-Dec 2008: 4.00% 27.99%
Source: CardTrak (

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